The world is an unpredictable place. In the last half of the last decade, nearly everyone in the housing industry went from booming success to hurting financially to survive, in just a few short months. This meant that major construction companies were starving for cash flow, banks were scraping the bottom of the barrel to collect money from people defaulting on loans. Employees were laid off everywhere and families were having a hard time getting back into the job market. For those that weren’t financially secure, the times were devastatingly hard. People suffered from a form of personal bankruptcy because they weren’t prepared. Here are five things that you can do to be prepared for a personal bankruptcy.
1. Save money. This is the easiest preparation item to skip out on, and yet it is still the most important one to keep. Every family needs a savings account for emergencies. This account needs to be a bit larger than just a few hundred dollars. Prepare it to be able to pay all of your bills for a significant period of time. That way, should you lose your job, you can still pay for your phone, your car, your food, your home and anything else your family might need to get through your period of unemployment.
2. Stay out of debt as much as possible. The only other thing that can spiral you down to a zero balance is debt. Excessive debt is hard to pay off. When you default on it, companies often reserve the right to take out a lien on your possessions, ensuring them payment for your debt by having legal right to your things. Only go into debt when you really need it and you can afford to pay it off.
3. Understand your tax breaks. There are many opportunities for tax breaks as a family man. Know the system well. When you have good claims to make, make them to get tax breaks. The tax system is confusing, but it is set up so that you can get ahead at the same time.